1 Cash-Producing Stock with Exciting Potential and 2 We Find Risky

A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.

Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. That said, here is one cash-producing company that leverages its financial strength to beat its competitors and two that may struggle to keep up.

Two Stocks to Sell:

GE HealthCare (GEHC)

Trailing 12-Month Free Cash Flow Margin: 6.9%

Spun off from industrial giant General Electric in 2023 after over a century as its healthcare division, GE HealthCare (NASDAQ:GEHC) provides medical imaging equipment, patient monitoring systems, diagnostic pharmaceuticals, and AI-enabled healthcare solutions to hospitals and clinics worldwide.

Why Are We Hesitant About GEHC?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Performance over the past four years shows its incremental sales were much less profitable, as its earnings per share fell by 3.8% annually
3. Free cash flow margin dropped by 7.2 percentage points over the last five years, implying the company became more capital intensive as competition picked up

GE HealthCare’s stock price of $78.07 implies a valuation ratio of 15.9x forward P/E. Check out our free in-depth research report to learn more about why GEHC doesn’t pass our bar.

Fastly (FSLY)

Trailing 12-Month Free Cash Flow Margin: 5%

Taking its name from the core advantage it delivers to customers, Fastly (NYSE:FSLY) operates an edge cloud platform that processes, secures, and delivers web content as close to end users as possible, enabling faster digital experiences.

Why Do We Steer Clear of FSLY?

1. Struggled to drive increased usage of its software, demonstrated by its subpar 103% net revenue retention rate
2. Gross margin of 55% reflects its high servicing costs
3. Historical operating margin losses point to an inefficient cost structure

At $11.77 per share, Fastly trades at 2.5x forward price-to-sales. To fully understand why you should be careful with FSLY, check out our full research report (it’s free for active Edge members).

One Stock to Buy:

Lululemon (LULU)

Trailing 12-Month Free Cash Flow Margin: 10.7%

Originally serving yogis and hockey players, Lululemon (NASDAQ:LULU) is a designer, distributor, and retailer of athletic apparel for men and women.

Why Are We Bullish on LULU?

1. Same-store sales growth averaged 5.3% over the past two years, showing it’s bringing new and repeat shoppers into its stores
2. Differentiated product assortment leads to a best-in-class gross margin of 58.8%
3. LULU is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders

Lululemon is trading at $169.86 per share, or 13.8x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .

Stocks We Like Even More

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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